Optimistic and pessimistic mood of the business community also affects the economic activities is the view of Pigou. Let's understand this view in detail:

Pigou's view

Pigou was a British economist who believed that the business community's mood has a significant impact on economic activities. According to him, the optimism or pessimism of the business community can affect investment decisions, consumption patterns, and overall economic growth.

Impact of Optimistic Mood

When the business community is optimistic, they are more likely to invest in new projects, expand their businesses, and hire more employees. This, in turn, leads to increased economic activity, higher employment rates, and more consumer spending, which further stimulates economic growth.

Impact of Pessimistic Mood

In contrast, when the business community is pessimistic, they tend to hold back on investments, reduce their workforce, and cut back on spending. This creates a negative cycle of reduced economic activity, lower employment rates, and decreased consumer spending, which can lead to a slowdown in economic growth.

Conclusion

Therefore, it is crucial for policymakers to pay attention to the mood of the business community and take steps to improve their confidence and optimism. This can be achieved through policies that promote stability, encourage investments, and reduce uncertainty in the economy. By doing so, the policymakers can create a favorable environment for businesses to thrive, leading to increased economic growth and prosperity.

This can't be in explained it's a theory/ thesis given by them!